The Top Easy Access Savings Discussion Area

S_uk

Have opened a Zopa account, easy process and paid in £1 which cleared in about 20 mins. Now for the fun and games transferring larger funds from my Natwest linked account, who were constantly blocking payments I made to Chase.

eskbanker

murphydavid said:

eskbanker said:

murphydavid said:
However I can assure you that Shawbrook compounds interest daily its in there T&Cs section 10. There is daily compounding irrespective of how long you keep the account.

No, it's calculated on a daily basis but can't compound until it's actually paid into the account, which is monthly or annually....

10.1 Interest is calculated on a daily basis on cleared credit funds and is paid in accordance with the Key Product Information terms.

If you closed your account half way into the first month I can assure you you would get compounded interest along with your capital. Its there you just cant see it till the end of the month or on closure.

Closing an account midway through month one makes no difference to the principle - assuming no deposits beyond an opening one, you'd receive interest of (1/365th of the quoted gross rate * number of days * that balance) added to give the final closing balance, but there'd be no compounding involved, as that can only arise when earning interest on interest....

If you're asserting that interest is added daily (to allow compounding) then please support that claim with any evidence that contradicts what the Ts & Cs do say.

Mr._H_2

murphydavid said:

eskbanker said:

murphydavid said:
However I can assure you that Shawbrook compounds interest daily its in there T&Cs section 10. There is daily compounding irrespective of how long you keep the account.

No, it's calculated on a daily basis but can't compound until it's actually paid into the account, which is monthly or annually....

10.1 Interest is calculated on a daily basis on cleared credit funds and is paid in accordance with the Key Product Information terms.

If you closed your account half way into the first month I can assure you you would get compounded interest along with your capital. Its there you just cant see it till the end of the month or on closure.

No, you would get interest, calculated on a daily basis. "compounded interest" means "interest paid on interest". Interest cannot compound if it hasn't been added to your account.

Let's say you have £1000 in your account and the AER is 2%, paid monthly, and calculated daily.

This would mean that the monthly interest you get paid is "compound interest", because if you leave it in the account, then on the next month, you will get interest on your original amount, plus the interest on the interest.

Your monthly interest rate is therefore 1.02^(1/12) - 1 = 0.16515813%:

So, if you deposit £1000 and leave it in the account for a year, your balance will go like this:

balanace at end of month
1	1001.65158
2	1003.30589
3	1004.96293
4	1006.62271
5	1008.28523
6	1009.95049
7	1011.61851
8	1013.28928
9	1014.96281
10	1016.6391
11	1018.31816
12	1020

The daily interest can be calculated from the monthly interest, by dividing the monthly rate by the average number of days in a month:
 0.16515813*12/365 = 0.005429856%, which gives 5.43 pence per day in the first month. If you put £1000 in the account, and left it there, the interest calculated for each day of the first month would be 5.43 pence. The calculated amount wouldn't go up until the end of the first month, when instead of calculating the daily interest on £1000, they would calculate the interest on £1001.65.

If the interest compounded daily, the daily rate would be 1.02^(1/365) - 1 = 0.005425525% this is slightly lower than the previously calculated value, due to accounting for the compounding affect which is necessary to end up with the same 2% AER

Patr100

IIRC according to previous posts here, Zopa started with a lower limit (£50K) then went to 85k (when I joined) then back to £50k for new savers, and now back up to 85K max again. although the actual sequence and timscale may be different to what I remember.

intalex

My experience of withdrawals with Shwabrook: Test withdrawal (small amount) soon after account opening was received within a couple of hours. Actual withdrawal (larger amount) requested before 08:00 today and as at 18:30 no sign of it, will probably arrive tomorrow. Also, for the test withdrawal I didn't get an SMS to alert on the withdrawal, but for the larger withdrawal I did (and it referred to some T&C clause for withdrawal timelines).

Rollinghome

murphydavid said:

Rollinghome said:

murphydavid said:https://www.shawbrook.co.uk/media/2149/sb_sv_personalsavingsaccounttermsandconditions_20181123_14.pdf

Rollinghome said:

Oasis1 said:

I've screwed up on that front. Should have picked monthly so have messaged to ask if I can change.

Ah, but you will get 1.75% instead of 1.74% (1.75% AER) if you move somewhere else after a month or so - which isn't too implausible at the moment.  Maybe enough to buy a few bubbles on your latte. (Pity about any extra tax of course. Could always close and re-open.)

You don't get less or more interest. They just working the math backwards so to speak. The interest is actually calculated daily on a daily rate. The real rate that's used but not stated. That rate is worked out backwards so that you would get the quoted APR if it was in for 365 days.
So if you work backwards from the APR to the monthly rate (or forwards from the daily rate) that will give you a percentage you can quote. Its just meaningless math. You always get the same APR both ways. If you chose monthly you just get more updates and a way to move interest from one tax year to the next.
As I understand it.

murphydavid  I think you may be confusing APR with AER. 

APR, Annual Percentage Rate, is the applied rate, whereas AER is the Annual Equivalent Rate, i.e. the return you would get only if you allowed your monthly interest to compound for a full year.  If you kept the deposit for less than a year, or withdrew the interest each month, then you wouldn't get the AER quoted.

The Shawbrook account pays an applied gross rate of 1.75% APR for annual accounts. The monthly account pays 1.74% APR, which with compounding, gives an AER of 1.75% after one year. . If you keep the account for just a month, as mentioned, there will be no compounding, just the 1.74% gross rate shown.  Whereas for the annual interest account you will get the full 1.75% gross rate, calculated daily, regardless of whether the account is open for a month, a day, or a year. 

Furthermore, if you close an annual account paying say 1.75% gross after less than a year, or between annual interest payments and, if you re-invest the interest received in another account paying a similar rate, you would get further interest on that interest and so potentially get an AER higher than the quoted applied rate.  Not that I suggesting you bother to do that.

Yes I should have said AER not APR sorry about that.
However I can assure you that Shawbrook compounds interest daily its in there T&Cs section 10. There is daily compounding irrespective of how long you keep the account.
I may be wrong but I believe that daily rate is the same for both options. I also failed to say the obvious that you will get the same interest on both only if when selecting monthly you also select that all interest is to remain in the account.

If you are referring to the T&Cs here https://www.shawbrook.co.uk/media/2149/sb_sv_personalsavingsaccounttermsandconditions_20181123_14.pdf then afaics, the term "compound" or anything similar doesn't appear either in section 10, nor anywhere in the entire document.

Interest is calculated daily and paid either monthly or annually. If you could paste the passage you read together with the URL, the section and the paragraph numbers, perhaps the reason for the confusion might become clear.

where_are_we

Opened Zopa Smartsaver account quickly and easily. Remember its an App only account. None of the issues associated with opening the Chase App account. £1 test payment took a few minutes. So if you are hesitating go for it. I realise it`s a bit of a merry-go-round at the moment but might as well ride the crest of the wave.

SJMALBA

Historic account, not available to new applicants:

Coventry Building Society 'Four Access Saver' increasing from 1.5% to 1.85%, effective 1.9.22

All other CBS accounts:

https://www.coventrybuildingsociety.co.uk/content/dam/cbs/member/pdfs/savings/rate-change-notice.pdf

murphydavid

Mr._H_2 said:

murphydavid said:

eskbanker said:

murphydavid said:
However I can assure you that Shawbrook compounds interest daily its in there T&Cs section 10. There is daily compounding irrespective of how long you keep the account.

No, it's calculated on a daily basis but can't compound until it's actually paid into the account, which is monthly or annually....

10.1 Interest is calculated on a daily basis on cleared credit funds and is paid in accordance with the Key Product Information terms.

If you closed your account half way into the first month I can assure you you would get compounded interest along with your capital. Its there you just cant see it till the end of the month or on closure.

No, you would get interest, calculated on a daily basis. "compounded interest" means "interest paid on interest". Interest cannot compound if it hasn't been added to your account.

Let's say you have £1000 in your account and the AER is 2%, paid monthly, and calculated daily.

This would mean that the monthly interest you get paid is "compound interest", because if you leave it in the account, then on the next month, you will get interest on your original amount, plus the interest on the interest.

Your monthly interest rate is therefore 1.02^(1/12) - 1 = 0.16515813%:

So, if you deposit £1000 and leave it in the account for a year, your balance will go like this:

balanace at end of month
1	1001.65158
2	1003.30589
3	1004.96293
4	1006.62271
5	1008.28523
6	1009.95049
7	1011.61851
8	1013.28928
9	1014.96281
10	1016.6391
11	1018.31816
12	1020

The daily interest can be calculated from the monthly interest, by dividing the monthly rate by the average number of days in a month:
 0.16515813*12/365 = 0.005429856%, which gives 5.43 pence per day in the first month. If you put £1000 in the account, and left it there, the interest calculated for each day of the first month would be 5.43 pence. The calculated amount wouldn't go up until the end of the first month, when instead of calculating the daily interest on £1000, they would calculate the interest on £1001.65.

If the interest compounded daily, the daily rate would be 1.02^(1/365) - 1 = 0.005425525% this is slightly lower than the previously calculated value, due to accounting for the compounding affect which is necessary to end up with the same 2% AER

Yes. Using your interpretation I would be interested to know your calculations of the monthly amounts of interest if compounded monthly at gross 1.74% that result in an AER of 1.75%.

Olinda99

Coventry 1.55 from 1st Sept